Gabelli’s major add follows the October deal in which McKesson Corp. (MCK), the largest U.S. drug distributor, acquired PSS World Medical for $29 per share in cash with a plan to combine it with McKesson’s medical surgical business. McKesson’s acquisition of PSS World Medical’s distribution of medical products to physician offices and long-term care homes is a gain of the company’s $2.1 billion in annual sales (PSSI), and a cost savings estimated at $100 million a year within four years. Commenting on the savings, The Gabelli Healthcare & Wellness Trust (GRX) fund portfolio co-manager Jeff Jonas stated, “The combined company will be significantly bigger and the $100 million in synergies is reasonable given savings in warehouses, delivery, and slightly better purchasing from the manufacturers.”
At the end of Dec.2012, GRX had net assets of $137 million. This Gabelli Trust is described as “a closed-end, non-diversified management investment company whose investment objective is long-term growth of capital.”
For GRX tangible book value versus price, go here.
PSS World Medical Inc. has a strong track record of return on capital for the last 10 years. The revenue of PSS World Medical Inc. is ranked higher than 65% of the 17 companies in the industry. For EBITDA, PSS World Medica, Inc. scores 11.4, ranking higher than 82% of the 17 companies in the industry where the median is 3.7. For earnings per share, PSS World Medical Inc. rates a 10.2, and is ranked higher than 76% of the 17 companies in the industry where the median is 4.5. PSS World Medical Inc. receives an 0.6 for Peter Lynch Fair Value, and is ranked lower than 71% of the 17 companies in the industry with a median of 1.7. For a detailed analysis of PSSI, go here.
Mario Gabelli’s PSSI Holding History:
Take a look at Mario Gabelli’s holdings here.
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